Big on ambition but short on cash? Yes, it can be a challenge for companies in the United Kingdom to scrounge enough funds to build or refurbish a commercial or industrial property if you go at it alone.
Fortunately, that shouldn’t be the case. Numerous financial institutions offer a range of choices for property development financing.
Things to Remember Before Looking for Financial Solutions
If you’re a complete novice to the fields of property development and development financing, sit down and pay attention to the next bit. There are several things to consider before you head off and apply for a loan.
For one thing, there are several types of development finance. It’s a broad spectrum encompassing everything from commercial mortgages, standard business loans, and even secured and unsecured personal loans.
Likewise, the country isn’t short of lenders. On the contrary, the dynamic nature of the current UK development lending market means that there’s bound to be a lending facility that has a good deal for your needs.
Another thing you need to stop and think about is eligibility. Apparently, there are no set standards as some lenders will simply look at your credit score. Still, others will demand a full shebang of requirements ranging from a concrete business plan to a solid investment strategy.
It also helps if you learn more about the property development finance scene before making calls or sending emails to potential lenders. The more you know, the less likely that you’ll be gypped by unscrupulous entities.
What Are My Options For Financing My Development?
While ready cash is always a good thing for buying, building, or refurbishing property, not everyone has vast sums at their immediate disposal. For this reason, many lenders offer many solutions which may include but not strictly be limited to:
Buy-to-let mortgages
These are the go-to option for people who want to buy a property, fix it up, and lend it out to rent. Unlike conventional mortgages, these have higher interest charges, work on an interest-only basis, and can rack up more substantial fees;
Buy-to-sell mortgages
Similar in principle, these apply to the purchase of property to be sold upon refurbishment or completion. These tend to be more flexible than standard mortgages, but as above, entail higher interest and fees;
Bridging finance
These short-term loans are more common among those seeking to borrow money to purchase a new home pending the sale of their old one. But in the commercial/industrial context, these cover the cost between purchasing a property and the time you finally sell it. Take note, though, that like its residential counterpart, lenders will ask for a concrete exit plan to show how and when you intend to pay the loan off fully;
Property development finance
The term covers a broad spectrum that includes specialised loans for established property developers and loans related to commercial and/or industrial refurbishment. Lenders’ acceptance and rates are entirely dependent on your own track record regarding property development and how solid your business plan is.
When considering a loan for property development in the UK, it’s crucial to explore the various financing options available, including property development loans, to determine which one aligns best with your specific project and financial requirements.
Personal loans
Whether these are secured or unsecured, they help projects on a smaller scale, such as minor refurbishment.
Considering a loan for property development? Read our development finance guide here to learn more about your options. Then, reach out to us for expert advice on which loans best suit your needs.
